Nigeria: 'Why Nigerian Airlines Face Threats of Extinction' - THISDAY
Industry experts and airline operators have said the challenging operating environment characterised by high interest rates, unstable foreign exchange and poor infrastructure are some of the factors threatening the existence of airlines in the country.
Currently there are only seven commercial operators in the country compared with 13 seven years ago, while there about 42 aircraft as against 92 years back.
In the last 10 years Nigeria had active airlines such as Virgin Nigeria Airways, Bellview, Chanchangi, IRS, Al Barka Airlines, Sosoliso, Discovery Air, ADC. But all these have gone under leaving only Arik Air, Air Peace, Overland Airways, Medview Airline, Aero Contractors, First Nation Airways and Azman Airline operating.
However, in the last four years Discovery Air, Virgin Nigeria Airways, Chanchangi and IRS have gone under.
Speaking on this development, former Managing Director of Bellview and the President of Aviation Round Table (ART), Elder Gabriel Gbenga Olowo observed recently that all the commercial airlines have about 42 aircraft and noted that the airlines are weak and threatened by extinction because they are insolvent.
"Insolvency simply put is when an individual or organisation can no longer meet its financial obligations. Do an x-ray of our airlines today, this is precariously what you find. All the airlines owe huge debts to fuellers, workers, government and trade partners," he said.
Olowo suggested that for Nigerian airlines to thrive and operate profitably for the long term they most come together and pull their resources together in order to have economy of scale.
"Airline operator that has five to 10 aircraft in its fleet cannot be described as a strong global player. Moving from two aircraft airline to five aircraft airline will be scratching the problem on the surface. There should regulation which will encourage pooling of aircraft and resources, harmonised schedule, eliminate current unhealthy price war, avail more destinations with enhanced schedule and ample down time for maintenance," he suggested.
Olowo also observed that single digit interest rate for airlines by Nigerian banks is doubtful under this dispensation given the present economic reality, noting that government could guarantee airlines for offshore funding, insurance cover, which should be seen as government's support for airlines with proven capacity and integrity.
On his part, the Chief Executive Officer of Aero Contractors, Captain Ado Sanusi explained that the airlines are operating in a very harsh environment "and these include double taxation, difficulty in the stability of the naira, costly overseas aircraft maintenance and high cost of aircraft spares."
He noted that there is general decline in the economy which has affected the finances of the citizens so not many can afford to travel by air anymore.
"To control costs every operating airline should be able to conduct its maintenance locally and as Nigerian airlines earn their revenues in naira, they pay hugely for the maintenance of their aircraft overseas. If you earn tickets in naira you have to change it to dollar to maintain your aircraft overseas. With the current exchange rate the airline pay substantial amount of its revenue for maintenance and that is why they should patronise the local maintenance facility we now have in Nigeria. This will save them a lot of money," he said.
Sanusi said that unlike in the past when there was so much rivalry among Nigerian airlines, for them to survive today they must cooperate in the technical areas.
"They must support themselves in the areas of skills sharing, maintenance and spares "and then compete at the level of commercial, ticket sales. That is the way it is done in other parts of the world," he noted.
"In future there will be a lot more collaboration between the airlines. When it comes to commercial that is when they can compete because maintenance is about safety, about flying safely, there is need to collaborate," he added.
Sanusi said government is aware of the threat being faced by the airlines and has realised the need of a formidable airline for the country's economic recovery.
"That is the reason why Asset Management Corporation of Nigeria (AMCON) does not want any airline to die and that is the reason it is doing everything possible to sustain the operations of existing airlines. This is because government would not want another airline to go under," Sanusi said.